Five ways to revitalize Detroit

In July 2013, the city of Detroit reached its nadir. Unable to service a debt estimated to stand at close to $20 billion, the municipal government filed for bankruptcy and, in the process, shattered the record for the largest Chapter 9 bankruptcy filing in U.S. history. The story of how the city fell into such a desperate position is one that has been told ad nauseum. The economic decline of Detroit has been dissected and studied extensively, and we’ve learned a great deal about how and why cities can collapse, and perhaps even more about what happens to the social fabric of a metropolis when its economy enters into a seemingly irreversible free-fall.

Since, however, reaching its lowest ebb in 2013, the city of Detroit is starting to shake off the recent-past. Remarkably, discussions surrounding what the future holds for Motor City are increasingly fused with a sense of optimism that simply wasn’t present a decade – or even five years, ago. The city is beginning to see inward investment and even population growth in some neighbourhoods. In the Spring of this year, the QLine – a 3 mile streetcar that comes with a $300 million price tag – will open, and next year the Detroit Pistons will leave the Palace and follow the Red Wings to the downtown Little Ceasars Arena. Against all the odds, downtown Detroit is in the midst of the something of a resurgence.

But while Detroit might be on the rise, there’s still much to be done. A look at the numbers suggests that the city has a long way to go if it is to become a thriving and self-reliant metropolis once again. Here are five ideas we’ve identified that can help in revitalizing the Renaissance City.

1. Rightsizing Detroit

Drive a couple of miles north of downtown Detroit and it quickly becomes clear that a plethora of the city’s neighborhoods will never be fully-populated again. The reason for this is that since 1950, The D’s population has declined by 50%, meaning that a city designed to accommodate 2 million people is being supported and funded by a tax base of less than half that number. A particularly harmful consequence of Detroit’s population is decline that the city’s denizens are scattered throughout the the urban sprawl, putting an unnecessary strain on public services. The situation has become so desperate that there is now a 58 minute 911 response time for major crimes.

One way to improve the efficiency of public services is to encourage and incentivize the relocation of Detroiters to more concentrated parts of the city – a scheme known as ‘rightsizing’. The plan would involve demolishing around 10,000 unoccupied houses and moving thousands of residents closer to the center of the city. The hope is that concentrating residents more centrally will support Downtown’s burgeoning economic and cultural revival.

2. Urban Farming

After demolishing Detroit’s under-populated suburbs, the next step is figuring out what to do with the excess land. An increasingly popular proposal is the idea that the city’s disused land ought to be converted into a series of urban farms capable of providing Detroit with not only fresh and affordable produce but also much needed job opportunities. With a staggering 1,400 farms now located within the city limits, urban agriculture is already starting to become a prominent feature of a city with one of the worst public health records in the country, and a poverty level of 36%. An additional, and in some ways less obvious, benefit of urban farming is that is adds property value to neighborhoods through addressing urban blight: Streets and blocks that have been devastated by foreclosures and arson can be transformed into economically productive spaces.

3. The Catastrophic Insurance Market

U.S. federal law currently states that the reserves held by insurance companies for natural disasters must be taxed as income. A consequence of this is that companies in the catastrophic insurance market have opted to keep their vast reserves offshore (in Bermuda and Cayman Islands), meaning that they are situated beyond the reach of federal regulators. Exempting the state of Michigan from the federal tax on insurance reserves could be a win-win for the U.S. government and the city of Detroit: If insurance companies were to move their natural disaster reserves to Detroit, the city would see the emergence of a new financial services industry while the federal government would be able to oversee and regulate the funds.

4. Re-locate Federal Offices to Detroit

There are a sizeable number of federal government offices that don’t need to be in and around Washington D.C. In fact, it’s increasingly common to find federal agencies located as far from capital as Baltimore, and with that in mind it might make sense to move as many agencies as possible to cities like Detroit in the Midwest. A good place to start would be the US Patent and Trademark Office which already has a satellite office in Detroit. There’s really no reason why this agency, which is responsible for issuing patents for products and intellectual property, needs to be based in Alexandria, Virginia, where property prices are at a premium. Another prime contender for relocation would be the National Institutes of Health which is headquartered in Bethesda, Maryland where the majority of its 20,000-strong workforce is based.

Relocating federal agencies to Detroit (as well as to other Midwest cities) would expand the tax base considerably and provide a significant boost to the economy by bringing thousands of highly-educated and well-compensated employees to the area. New businesses would likely spring up around the federal offices, and under-populated neighbourhoods would finally begin to attract new residents. But perhaps even more importantly, headquartering an agency like the Department of Housing and Urban Development in Detroit would ensure that federal government policy better reflects the needs of those cities hit hardest by economic decline and urban blight.

5. Detroit-only Visas

One straightforward and potentially effective way to reverse Detroit’s population decline would be to issue an extra 50,000 EB-2 visas which stipulate that the recipient must spend a set number of years in the city or start companies with investments of at least $500,000 and at least 10 employees. The “Detroit visa” proposal – which has been championed by the current Governor of Michigan, Rick Snyder – has received a warm reception from the city’s business leaders who recognize that Motown is in desperate need of highly-skilled workers.

Were the federal government to sign off on the scheme (a long-shot), Detroit could find itself with a population of >1 million within six years. And assuming that recipients of the visas found employment in well-paid professions, Detroit’s depleted tax base would be expanded considerably. (You can read more about the idea here).